This past weekend I went to a cool real estate seminar from www.landtrust.net This company is the only one with this unique way of putting property in a land trust. Using their system is not a alternative, but a new way to do everything (short sales, foreclosures, Self directed IRA, seller financing, etc)
It is a very cool option for investing. This is how it works... You find a motivated seller. You ask them questions about the property to gauge their level of desire. The seller agrees to hold their equity (or at least majority of it). You the investor, explain all of the benefits of course (benefits listed below). What is cool, is that the seller doesn't have to worry about making the payments, maintenance, paying taxes and mortgages...you the investor will pass on those fees to a buyer. This is called a triple net lease...this is where the tenant pays for everything. Major franchises do this when they lease space.
The property goes into a trust something like a escrow. The trust makes all of the payments on the property. The home seller actually gets to write off taxes as well. So what the investor does is negotiate an agreed price/value for the home now, not what it could be. The home seller, will then get their remaining equity, when the investor refi- or sells the property.
So the home is in a trust. The beneficiaries of the trust is
the original seller
the investor
the resident person living in the home
By doing it this way, it eliminates liens and judgments. It is a very cool system.
With the house in the trust, the investor, pumps up the value of the home 5%. This is where the investor makes their money. So the investor advertises the home, with "no bank qualifying, little as 2 monthly payments, no credit check etc.
The buyer pays more in monthly mortgage if they would of bought the house, but they benefit, because if they don't have good credit they can get it. It is like a lease option, but it really isn't I will explain later. Plus rather than putting 20% down the traditional way they can move in.
If you did a lease option...the person moving in puts a down payment on the property. Now since they have the money in, they have equitable interest in the property. If they happen to stop paying the mortgage, you the homeowner can not evict them, you have to do a judicial foreclosure...which means money out of your pocket and they will be staying rent free. Not only that it violates the due on sale clause from the bank. Sure a lot of people do lease options, with out the bank knowing, but like driving a car with out a seat belt all it takes is one accident.
Here are the selling points.
- transfer full ownership including tax benefits with out title transfer
- acquire (or sell) property of all types without cash or credit...or title transfer
- Shield any property from liens, lawsuits and judgement, including IRS liens
- trade income tax benefits for higher rents from a lease tenant
- charge much lower after tax rent while receiving more per month
- take over loan payments with out a due on sale clause
- transfer real estate with one document, with out escrow involvement
- structure equity shares safely and effectively with out Tenants In Common
- Structure lease options with out possible "equity" claims to forestall eviction
- structure all creative financing objectives safely without the threat of actions by others
- put sellers who would never trust creative financing or investors at ease
- structure partnerships without standard income tax reporting obligations
- hide real ownership from all prying eyes
- avoid reassessment and property tax increases when transferring ownerships
- avoid re conveyance (transfer) fees when transferring ownership interest
- convert realty (the property) to personalty, while still qualifying for 1031 real estate tax differed exchange exemption
- avoid "dealer status" when acquiring multiple properties
- delay taxation on capital gains when transferring ownership
- maintain complete privacy and anonymity of ownership
- avoid probate upon the death of an owner
- attain simplicity in multiple ownership (only one party need sign documents)
- structure safe and profitable leases and options with the land trust
- avoid public disclosure of acquisition and sales price
- avoid partition during a dissolution of a business partnership or a marriage
- avoid the necessity of new title insurance when ownership is transferred
- certain real estate brokerage regulations can be side stepped
- eliminate damage by spousal claims and sabotage in marital disputes
- acquire foreclosures safely and simply without bank involvement
- avoid seasoning issues and double escrows in flips and assignments
- structure simple time shares with vacation property
- handle foreclosures bailouts without equity stripping and violation of civil code regs
- make big money fast with tenant/buyers with minimal cash and poor credit
- manage out of area income property with out cost or personal involvement
- acquire grossly over encumbered and over leveraged property for big profits
- own a home for years and still qualify as a 1st time home buyer loan
- sale through lightening fast closings with out escrow or title involvement
- enhance your credit strength and leverage by not showing an income property schedule on mortgage applications
- designate your ROTH IRA as the beneficiary of your trust and earn major dollars with out ever paying any income tax.
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